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DELEGATED LEGISLATION

Immigration (Leave to Remain)

Ordered,

That the Immigration (Leave to Remain) (Fees) Regulations 2003, (S.I., 2003, No. 1711) be referred to a Standing Committee on Delegated Legislation.—[Jim Fitzpatrick.]

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Bombardier Rail Manufacturing

Motion made, and Question proposed, That this House do now adjourn.—[Jim Fitzpatrick.]

4.28 pm

Mr. Bob Laxton (Derby, North): I am grateful for the opportunity to bring before the House a matter of vital importance to my constituents and to others in adjoining constituencies in Derbyshire.

Derby has been at the centre of train manufacturing for 163 years. It is a long and proud tradition. Its economic growth has been due in part to its location in the middle of England and to the strategic importance that that gave it in a country that was building trains as it raced into the age of industrialisation.

According to Brian Radford, a local historian and writer in Derby, from 1839 to the 1960s, most trains had to go through Derby to go from the south to the north-east or Scotland. That served only to convince me as I grew up in Derby that Derby truly was the centre of the universe.

Since the 1960s, when the manufacture of locomotives moved to Crewe, and later, when privatisation saw the growth of intense international competition, Derby has seen a slow decline in its railway fortunes. Following the closure of Alstom's site in Washwood Heath in Birmingham, Bombardier in Derby is now the only train manufacturing company left in the UK.

In July, the Strategic Rail Authority gave the TransPennine franchise to FGK, a consortium consisting of First Group, a British company, and Kelios, a French company. For eight years from 2004, FGK will run trains from Hull, Leeds, Durham and Sheffield to Manchester, Liverpool and Lancaster. Siemens and Bombardier came forward when FGK announced that it was accepting bids to supply the new franchise with 56 new diesel-electric trains. Siemens won the bid, which was a severe blow to Bombardier and train manufacturing in the UK. The bid was worth £200 million—more if a maintenance and logistical contract is included for the full 30-year life of the trains. Although Bombardier won an order worth £3.4 billion from London Underground in April, it will not start working on that 15-year contract until 2008, leaving a gap of about three years in its order book, from the end of 2004 to 2008.

To put that in perspective, when Alstom closed its Birmingham site in the summer, it had an order-book gap of six months. What chance does Bombardier stand with an order-book gap of 36 months? It has already said that it intends to review its European operations, and a gap in its order book could put Derby at the top of the list of sites for closure. It employs 1,800 people at its Litchurch lane plant in Derby. Moreover, it sources 80 per cent. of its manpower and materials in the UK, payment for which amounts to £450 million. A sum of £30 million is spent on its wage bill, while £50 million goes to suppliers within a 30-mile radius of Derby. Ten thousand people in the supply chain could be affected by closure of the site.

By contrast, the winning Siemens bid will result in the shell for British trains being created in the Czech Republic and the fittings being manufactured in

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Germany. My right hon. Friend the Minister for Industry and the Regions has not yet visited Bombardier, but if she speaks to our hon. Friend the Minister of State, Department for Transport, who visited Derby in September, she would learn about the depth of feeling, both in Derby and well beyond, about a possible closure. I thank my local newspaper, the Derby Evening Telegraph, for the excellent and energetic campaign that it ran over the summer against the possible job losses at Bombardier.

That campaign was supported by more than 3,000 individuals, including people across the UK, in Argyll, Cumbria, Newcastle, and all over the world, in Australia, Vancouver in Canada, Michigan in the USA and, closer to home, Brittany in France. This is not just another loss of manufacturing jobs and Bombardier is not just another company manufacturing an obsolete product in an obsolete fashion. It is a high-quality company with highly skilled workers who are manufacturing something that I am certain the Government do not view as an obsolete mode of transport.

Laura Moffatt (Crawley): I am grateful for an opportunity to contribute to this important debate. My hon. Friend knows that I went to Derby as a member of the Industry and Parliament Trust, and that we visited the Bombardier operation with the Go-Ahead Group to look at the way in which trains are manufactured. I was shocked at the excellence and cleanliness of Bombardier's fantastic operation and the way in which it attracted women into a heavy-engineering business. The loss of such an operation will be felt not just in his constituency but much further afield.

Mr. Laxton: I thank my hon. Friend for her intervention. No one could fail to be impressed by Bombardier's operation in the city of Derby. I well remember visiting the old loco and carriage-side works as a young person, and left feeling that I needed a scrub down, given all the oil, swarf and so on. Bombardier is a high-tech company—one feels that one could almost eat one's food off the floor. Manufacturing processes have been completely revolutionised over the years.

I have already mentioned that UK suppliers would be badly hit if Bombardier ceased manufacturing at the Litchurch lane site in Derby. A number of those suppliers are based in Derby. AVE Rail is based at the Bombardier site itself, and rents its building from the company, which seems logical as it sends 50 per cent. of its production to the Bombardier factory next door. AVE employs 160 people, and its work with Bombardier brings in £8 million a year.

Time 24 is a company that won the Derbyshire business of the year award in 2000. It manufactures the heating, lighting and air conditioning parts of Bombardier's trains. It employs just under 200 people, and 75 per cent. of its output goes to Bombardier. The impact of Bombardier's closure would ruin small and medium-sized companies, such as AVE Rail and Time 24, around the UK.

The Government have sought to tackle the chronic lack of investment in the railways dating back to the 1970s. The haphazard manner in which the railways were privatised did not help. However, many

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engineering companies that traditionally worked hand in hand with British Rail, and later with the privatised franchises, have survived well.

After the devastating decision by FGK to grant the order to Siemens, I received a letter from a Mr. A. J. Hough, the managing director of Engments, a Derby-based engineering company. He said that his company had "toughed out" the period after privatisation, when

"virtually no orders were placed, secure in the knowledge that the industry was in the position where new trains were desperately needed, and that new orders would be placed once the industry settled down after privatisation and establishment of the new Rail Franchises".

He went on to say that although

"the period of inactivity was extremely painful, we felt reasonably assured of a long term future".

The loss of up to 1,800 jobs at Bombardier is bad enough, but we could also be talking about up to 12,000 additional jobs in the supply chain if we consider the domino effect of the additional closure at Bombardier.

What is even more scandalous is that FGK has won the TransPennine franchise for only seven years. Beyond that, there is no guarantee that it will run the service. However, the Government, using British taxpayers' money, will have to underwrite—that is, guarantee—the purchase of rolling stock. A Department for Transport spokesperson, commenting on the decision by FGK to grant the contract to Siemens, said that the decision was "wholly" that of FGK. Indeed, my hon. Friend the Minister of State, Department for Transport, said in a letter that it is not the Strategic Rail Authority's business

"to influence bidders over the choice of suppliers or sub-contractors".

That position has also been taken publicly by the head of the SRA, Richard Bowker.

If the long-term risk of the venture lies with the Government, should not they have a say in the decision on the bid? Why should the British taxpayer subsidise jobs at a Siemens plant in Germany, for example? That has already begun to happen. Soon after receiving a contract for work with London Underground, Alstom pulled out of the UK. If Bombardier closes its Derby site, all future orders for UK trains and underground trains will be manufactured by companies outside the UK.

Following the Bible of free-market economics and the law of comparative advantage only goes so far in improving the living standards of the British people. What is the true financial cost of Bombardier leaving? It is more than the value of the contract that we are losing and the consequent effects on the balance of payments. How many people will have to depend on benefits after leaving Bombardier? We all know from the Thatcher years that the social cost of unemployment is devastating, and we are still dealing with the effects of long-term unemployment 24 years after Mrs. Thatcher was elected. We need to take a hard look at how we go about allocating our railway franchises, and, subsequently, at how the companies that receive those franchises operate.

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